Posted
by
timothyon Tuesday March 11, 2014 @04:38PM
from the that's-rather-a-pointed-description dept.

An anonymous reader writes with this excerpt from Investor's Business Daily:"Buried deep in a section of President Obama's budget, released this week, is an eye-opening fact: This year, 70% of all the money the federal government spends will be in the form of direct payments to individuals, an all-time high. In effect, the government has become primarily a massive money-transfer machine, taking $2.6 trillion from some and handing it back out to others. These government transfers now account for 15% of GDP, another all-time high. In 1991, direct payments accounted for less than half the budget and 10% of GDP. What's more, the cost of these direct payments is exploding. Even after adjusting for inflation, they've shot up 29% under Obama." It's very hard to lay blame on only one part of the U.S. government, though; as the two largest parties are often fond of pointing out when it suits them, all spending bills originate in the House.

What I have a problem with is that I know several illegal residents here with their entire family living off of state and federal programs. One of them hasn't worked in years and hasn't needed to.

Now they don't live like the middle class, but sure live better than some of the homeless people that I have come across. They qualify for these programs because they have never had a job before.

What would you rather do? Work hard in your home country and live in poverty or come to the US illegally and live slightly above the poverty line and never have to worry about working at all?

I have a friend who has run out of unemployment insurance and has no possibility of a job in the near term because he is over qualified for almost everything. He is in the process of losing all that he has ever worked for.

Illegals like that don't just sit around and not work; they frequently work under-the-table, so they keep their healthy benefits while getting extra tax-free spending money. All those landscapers you see driving around are not W-4 employees and do not pay any taxes into the system.

No, the landscapers where I used to live in Phoenix all worked under the table. They were paid in cash. You don't need an illegal ID to get paid cash for a job. Go pick up some day laborers from Home Depot on Thomas Rd. and ask them if they ever needed an ID to get a job that way.

I worked at the IRS for eight years in a program that checked all income sources reported by employers and others (1099s, W2s, etc) against income reported on individual tax forms.

If you had a hispanic last name the odds were good someone illegal was using your identity for a job. We'd get 20 or more W2's reported for some people who only had one or two jobs. That means illegal workers are paying withheld taxes, SS & Medicare into the system, with no hope of recieving benefits.

I saw thousands of these cases, and I was only one person of about a hundred working this program in a 5 state area. The amount paid into these programs by illegal immigrants is huge.

One of the dirty immigration secrets is the billions that illegal immigrants pay into the SS and Medicare/Medicaide system that they will never utilize. Those clearly bogus payments are never investigated because it would mean shutting off that free cash.

Here's a fun fact the right doesn't often talk about. I've spoken to a number of actual illegals over the years about how much they fear being captured. Several of them appear to have what are "above board" jobs, having gotten identification numbers on a temporary work via and then continued to use them, or on various other methods. They overstayed, and are now illegal.

The general response was interesting. INS doesn't have enough resources to do anything unless you're a felon. Even getting arrested for a misdemeanor is unlikely to get INS involved unless your in a few border areas. They really didn't fear INS at all. However, each said they very carefully paid their taxes to the IRS each year, often omitting some questionable deductions to which they might be entitled. Why? The IRS will audit them. And while the IRS is forbidden by law to share information with other federal agencies so a return won't get you arrested, if the IRS choses to arrest you then you're in the federal system, automatically handed over to INS, and deported in short order.

The result is in fact many illegals pay taxes, but are not entitled to receive many of the benefits that other tax payers could receive. They are in fact the opposite of takers, but are rather over contributors.

Just fill this out [irs.gov] and you get an ITIN - which is as accepted as a Social Security number. It's even the same 3-2-4 type of number as a SSN, so it works great for illegal aliens to use for opening bank accounts, getting benefits, etc. And yes, a past girlfriend of mine (Thai national) had overstayed her visa about 8 years and used her ITIN for everything. At least she earned a living doing nails at a local nail salon, but it was a cash business (she "leased" her nail station). Never had a problem filing a tax return or getting benefits when she needed them... ITIN to the rescue!

Of course, if the illegal immigrant can convince the government that they are a "victim of trafficking," all the remaining barriers go out the window. Seems a simple plan: hire a Coyote [wikipedia.org] to sneak you across, then claim it was against your will, and bip-bam-boom! Full federal welfare bennies.

if only we had all realised it was as easy as bip-bam-boom!, we'd all be underpants tycoons or illegal immigrant millionaires.

and your method is so versatile, it can easily be adapted to countless other situations - for example, i could rob a bank, then claim that i was forced to do it by aliens and their evil mind control and bip-bam-boom! i'd end up with my stolen money and a complete acquittal.

The bottom line is that the term "government spending" is highly misleading, since the government is exercising no discretion on how it is spent... the government simply sends it to individuals (mostly old folks) who decide what their individual priorities are and where to spend it.

Ah, no. The vast majority of people get back far more in social security payments than they ever payed into it. It's the same ponzi scheme pensions relied on (except pensions require the corporation to grow forever rather than the population of the country) and why they to are failing. The only way our social programs can work is if the population of the united states continues to grow at the rate it did in the first half of this century, forever. Currently it is not, and that is why we have a problem. It's

Sure, when the ratio of unproductive old people to productive young people increases, the burden on the young people increases. This is true whether your accounting of chits uses dollars, entitlement programs, social customs (obliging children to support their parents directly), or anything else. There is no avoiding it. The only real questions are how to distribute the burden among the able-bodied, and how quickly the assets of the old are transferred to the young.

The concern here is for the financial well-being of our country. Once a majority population of a Democracy has figured out that they can just vote themsleves gifts from the coffers of the country, that country will certainly head down a swift path to financial ruin. That's why we don't have Democracy.

The founders of the United States fortunately were aware of this history, so they slowed this phenomonon down by deciding upon a Republic. By voting onl

Funny thing, as far as I know there are only 2 countries that practice direct democracy, one of which is a Republic, namely Switzerland and one has a monarch, namely the Principality of Liechtenstein. Both are very successful countries that have not gone down the path of financial ruin, at that the exact opposite has happened with the Swiss considered one of the most financially stable countries on Earth.BTW, all republic really means is not having a sovereign and lots of monarchies have representative governments and some are even federal laid out unions of sovereign states or provinces. There are also lots of republics that are totalitarian dictatorships.

Also, one of the listed examples was "farm subsidies". That is not something that can be assumed to be a "check to a person". A lot of large farms are corporate. So farm subsidies in some cases are just corporate welfare.

Perhaps this "checks to people" idea assumes that corporations are people too.

It's not that state politicians are more moral; it's that their power is more limited. Less power = less corruption - and they have 49 competitors, which are relatively trivial to move between (compared to moving to a different country, anyway).

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

Who is that said democracies fail when the population discovers they can vote themselves bread and circuses?

I largely agree. I just wish people would quit blaming politicians for everything, when those same people keep voting to keep their benefits and not paying enough taxes to fund those benefits. This surge in payouts to retiring Boomers has been predicted as long as I have been alive. And yet still this belief in some mythical solution involving only cuts to "waste" and "inefficiency" persists.

I hate to be the guy saying "why is this on Slashdot", especially since I've been posting these very budget numbers here for years, when it has been relevant to the thread, but WTF? This is a blatant political click-troll story. It's not news (been this way for many years), and it's not "for nerds".

Sure, I guess we could rehash the same old "NASA's budget is trivial in the scheme of thing" posts, but really.

As the article points out, most of this is going to mandatory programs, which would be the same even if it were Romney or McCain or Sarah Fucking Palin in office.

What this means, for those dumb enough to believe what they read in IBD, is that what Obama has achieved is to reduce the amount of spending on the discretionary side. Agriculture, down 8%. HHS, down 7.6%. Even Homeland Security, down 2.8%. The Pentagon is down over $100 billion.

But hey, by all means, let's make sure that this looks like Obama's doing a bad job, because that was clearly the author's goal before he wrote it. The rest is just a matter of selecting the data until it proves what you wanted it to prove.

When we hear a serious discussion of how to cut benefits (something other than "the poor should die" and "let's give it all to Wall Street, because they're so freaking responsible"), we can have an actual conversation. But articles like this show why anything from Obama, no matter how reasonable, is doomed even before it gets printed.

There is no such thing as a mandatory program unless it is mandated by the Constitution. We can choose to recognize this fact, or we can be forced to recognize this fact. Either way it will eventually happen.

How mandatory is the payment of SSI? According to at least one Congressman [cnsnews.com], and the Supreme Court [cato.org] has also ruled that Social Security carries no legal obligation or promise. It is a benefits program that can be legally changed or even ended at any point, with no repercussion relating to the taxes collected from you. You have no legal right to your Social Security payments.

I'd say that is a LONG WAY from being mandatory. Sounds more like it's at-will by the Government, since there is no legal obligation t

If you download the spreadsheet you can see that they classify total spending as either "direct" or "grants", of which the vast bulk is "direct". Everything that is not a grant must be being paid to an entity of some kind, whether an actual person, a company, a non-profit or something. You can verify this is the total Federal spending using the Monthly Treasury Statements at https://www.fms.treas.gov/mts/... [treas.gov] - I recommend the PDF versions.

As for the percentage going to veterans, I expect the number of veterans isn't growing very much, whereas the Federal budget is. So a constant amount in a larger total is going to be a smaller fraction.

Bottom line, this article is FUD and should not be taken serious by anyone.

Much of the remaining 30% was things like defense and infrastructure -- this may be bloated, but in theory it benefitted fuure generations, so it was considered ethical to borrow from them to pay for it. But wealth transfer payments?

That is flat-out current generations refusing to carry their own weight.

By the way, taxing the rich won't cut it -- taxing 100% of the rich's income would gain you an additional $500 billion a year (assuming they continue to work for free, good luck with that and keeping their salaries pointlessly high). This is still hundreds of billions a year short.

No, every elected politician knows you have to tax the middle class to pay for the middle classess' wealth transfers (social security, whether retirement or disability).

And these politicians are cowards because they are a huge and motivated voting block.

No, we, the middle class, have to decide on an amendment to prevent ourselves from borrowing from our children. We won't, because we, and our politicians who we elect, are weak.

By the way, taxing the rich won't cut it -- taxing 100% of the rich's income would gain you an additional $500 billion a year (assuming they continue to work for free, good luck with that and keeping their salaries pointlessly high). This is still hundreds of billions a year short.

The richest have been undertaxed for decades.So you're right, taxing them at 100% won't fix the problem, because it was a problem decades in the making.

These types of budget problems cannot be fixed overnight, they require long term planning and gradual change.Oh, and they require higher taxes.

1. Please read the rest of my comment. I factor in Social Security - and that will only INCREASE their effective tax rate (how can additional taxes paid REDUCE their tax rate?)

2. Provably false. See EITC. [irs.gov] You can have an income and get tax back - even refunded more than the taxes you paid in. Meaning you can, in effect, not only not pay taxes on income, but get paid to not pay those taxes.

3. And how does that factor into anything? Tax payments, tax rates are still going up for the rich - and down for

The wealthiest individuals do not pay income tax because they don't have income. Their "income" is actually long term capital gains with the highest rate paid at 20%. They don't pay SSI, Medicare or Medicaide and even if they did they are capped at $125,000 in income. Because of this Mitt Romney had to pay extra taxes for his effective rate (the actual taxation rate) to be 15%.

For a wage slave to pay an effective rate of 15% they would need to make less than $10,000 per year. Warren Buffet has noted that he has paid less taxes (as a percentage of income) than his secretary since Regan was in office. Most of the 1% in fact avoid almost all taxes, including sales and others by using their wealth to exploit different state level taxation rates (such as keeping a home in a zero income tax state and a home in a zero sales tax state then spending part time in each state with sufficient time spent to eliminate both income and sales tax).

Properly executed with a good accountant the 1% have paid less than 10% in taxes by careful manipulation of their long term capital gains. It's possible to not only make money on a stock but claim an overall loss. And the best part about capital gains is that, baring dividends, no gains are realized until there is a transaction. This makes is possible to sink 100's of millions into a trust that appreciates in value but never pay taxes on it because a sale of shares never takes place. Then when money is needed a paper loss equal to the 20% tax is realized at the same time to eliminate the liability. This is so common now that the rich like Mitt Romney are forced to pay extra to hit net tax rates of 15%.

Only the middle class and upper middle class pay high taxable percentages, once you reach a certain asset threshold your taxation rate begins to drop substantially. The middle and upper middle class are the ones getting hosed, all so the richest among us can pay super low rates.

The entire argument about "passing the tax along" is bullshit. By the same logic, personal income tax is "passed along" to corporations, as people purchase less. It's disingenuous to focus on one particular link in the circular wealth transfer that is a functioning economy, and claim that taxing at that particular link is somehow unfair, while taxing all the others are fair.

As for "getting back at them rich", we just need to start taxing capital gains same as regular income (or better yet, more - it's only fair that "sweat of the brow" earnings are taxed less than collecting rent).

Of the 70% spent on "individuals", 39% is Medicare, Medicaid + "Obamacare" (I wonder what the split is - I'd guess 40-40-20), 33% is Social Security, 21% is poverty programs, and 5% is veteran's pensions, with the remaining 2% not accounted for in TFA (they mention farm subsidies and disaster payments later, perhaps that's what this is).

Medicare, Medicaid and "Obamacare" - the money eventually ends up in the hands of private health care providers funneled through more and more private health insurance companies, so we could rightly call this corporate welfare.

Social Security - This program is entirely self-supported by taxes specifically earmarked for Social Security (FICA). Guess what? Every year, there is a surplus. The treasury then converts this surplus into T-bills, and the surplus is then used to offset the deficit in the general fun

Ummm, what else is the government supposed to do with the money? If it gave the money back to the same people who paid the taxes in the first place, it wouldn't make much sense, would it?

This year, 70% of all the money the federal government spends will be in the form of direct payments to individuals, an all-time high.

Including medicare, medicaid, and Obamacare? So the payments for drugs and health care are counted as going directly to individuals. OK, and other than the military, what's left? Highways, schools, NASA, and the post office -- and we've been cutting all of those.

So in short, article is saying that taxes are money transfers (which they had better be, or they'd be really stupid), and that health care and social security are going up, and everything else but the military is getting cut. That's news?

At first, I thought the story here is that the U.S. government spends 70% of its budget on writing checks. To which my response would have been that moving to something more efficient than the ridiculous banking system we have in the U.S. would then make the federal government much more efficient.

It appears to be that, rather, 70% of the budget is being paid out to individuals - much of it in the form of health benefits, social security, and income security. Is that cause for concern? Direct payments to individuals have increased relative to other things the federal government spends money on. Ok, the percentages move, that's expected. They're now at 70% of the total budget. Ok, that's somewhat interesting. But what's the actual story here? Is some program growing faster than tax revenue to the point that we have to be concerned that we won't be able to afford it anymore? Did total budget decrease, thus making the percentage larger? Do you feel that the government is spending money on things they shouldn't be spending (as much) money on?

The article provides some more detail: it claims the percentage spent on income security will drop from 25% in 2009 to 17% in 2019, as more is spent on "middle-class entitlement programs such as ObamaCare". So I guess the problem isn't with the 70% being paid to individuals, but with the individuals it gets paid to. Fair enough, we all have our own ideas about which groups the government should be sending money to (if anyone), but perhaps it would have been more productive to get straight to that part, instead of suggesting that 70% is rather high, when the thing you would like money to be spent on is actually part of that 70%.

What if the checks are only taking money from the Fed, which creates it out of thin air anyway, and is required to return all interest on T-bills to the Treasury? No harm.

Lincoln realized that government's greatest potential lay in its ability to create money, and created over $400 million greenbacks to raise revenue without increasing taxes or borrowing it.. The Greenback Party of the 1870s, made up mostly of poor farmers who were being hurt by the deflation of trying to take those greenbacks out of circulation and go back on the gold standard, were ahead of their time in recognizing that government can and should create money to help individuals.

Ummm No. In the Bitcoin debates I have always been liberal on money creation – that some low level inflation is better than low level deflation. But never give control of the printing press to politicians. They will turn on the tap and inflation will spiral out of control. See Germany in the interwar era, or Zimbabwe a few years ago. Deflation may enrich the wealthy (as you point out), but high inflation destroys and savings of the poor and long term investments for the growth of tomorrow.

But now, the printing presses are controlled by the richest people in the world, which happen to profit the most from the current money printing. The biggest banks get essentially free loans, then buy treasuries at 2% yield, profit! All while the brunt of the population has to suffer the corresponding inflation. Sure, inflation is low, if you don't eat or use any energy.

The current system gives a ton of control to politicians. Modern states are pretty much never constrained from doing what they want to do for lack of money. When's the last time you heard them say: no we can't go to war, it will cost too much ? As well as allowing them to spend money however they want, the current system allows them to *not* do the stuff whenever they don't really want to (eg when it would only benefit a group with no politica

First, central bankers have shown a remarkable restraint. There haven't been ANY hyperinflation episodes in developed countries for more than 50 years. Even in developing countries or xUSSR countries most hyperinflation episodes are linked with political upheavals.

In fact, right now ECB doesn't print _enough_ money - inflation is way under the targeted level, threatening to go into outright deflation.

In fact, right now ECB doesn't print _enough_ money - inflation is way under the targeted level, threatening to go into outright deflation.

Have you been shopping for food in the last few years? All the important stuff like food, gas, heat and shelter sure seems to be going up faster then claimed. Or perhaps it is offset by the luxury goods that many or most can't afford or need to buy very often. I don't care if yachts and big screen TVs are getting cheaper. I do care that my income is flat and groceries keep going up.

I find that hard to believe. Just looking at one common item that I've really noticed has gone up, ground beef [usda.gov] has gone up from $3.005/lbs to $3.467/lbs since 2012, which is 15.4%. Lean ground beef has gone from $3.884/lbs to $5.021/lbs, which is 29.3%.

That's had a huge knock-on affect in fast food as well. Compare Wendy's "value menu" or "right price menu" or whatever they're calling it to the dollar menu of yesteryear (long ago in the foggy past of 2012). Same food items, now 20%, 30%, 50% more expensive.

The problem is that you mix tools and how they are used. Fractional reserve banking is not evil in itself. It basically creates, through credits the opportunity for economic growth. That being a company has a great idea, but not the capital to realize it. The bank has the capital, but not the idea. Through a credit it is possible to realize the idea and it is a win/win situation. The company makes a great product which it sells, the bank makes a profit through the credit and maybe even the people putting money into the bank make something off of it, though savings. This is all and well when you ensure that the bank makes proper risk analysis on the credits and on average comes out on top.

What you should really be afraid of the the credit bubble. What we are currently seeing is that individuals are given credits, which means they are now spending money and helping the economy grow, but this is at the cost that in the future this person will have less money to spend, since he is repaying the credit. So the economy slumps, as a result "to help the economy" more credit is injected. This has been going on since the 60s and in totally high ways since the 80s. The result is that the economic growth is propped up though credits and growing unnaturally. The economy is extracting money from individuals more than they can afford and the only way to keep the current pace is to increase individual debt. The situation is additionally aggravated by greedy bankers which gave out sub prime credits. There will be a point where the individuals dept is so grate that the scheme can't go on. This debt fueled economic growth is the ponzi scheme.

No, the politicians had fairly low control for most of the history, most of the time it has been tied to the gold standard. Lincoln went off the gold standard with the Greenbacks but he was punished whenever he drifted to far (IIRC the Greenback at one point trade $.25 to the dollar). FDR weakened the link but it was Nixon who cut it.

Fed governors are certainly politicians (just not elected), and the Fed has existed only since 1914. Before that time, the US Treasury spent money directly to fund its budget. Even under the gold and silver standards, the government constantly had to increase its leverage on the gold backing, but the US dollar never collapsed.

My broader point is that events like the Weimar hyperinflation are not the result of politicians madly printing money for no reason. The Weimar hyperinflation occurred because of combi

They don't hate inflation, they love it at moderate levels. Imagine the following, there is no inflation at all. You own money, it will never lose value. This is good for you, but but banks and companies can not make anything from it. Add moderate inflation and your money slowly loses value. Now you need to do something about it so you don't lose all your money. The banks offer to work for you to preserve the value of your money, FOR A SMALL FEE. They invest the money into companies (credits) or the stock

Anyone who thinks the fed "creates [money] out of thin air" and as a consequence is able to "raise revenue without increasing taxes or borrowing it" has undoubtedly received their economic education from a single source, namely youtube.com

When the federal reserve increases the supply of money, inflation is the net result. The net result of the fed increasing the money supply and inflation, is a tax on everyone who currently owns US dollars, as each of their dollars now purchases fewer real goods.

When a substantial portion of the money supply is out of circulation, printing money taxes that out of circulation money and gets it back into circulation, which can grow the economy. So while the effect you describe exists, it is not the only effect that must be accounted for. When the bulk of money in the economy is not circulating, the economy shrinks, and that's at least as damaging as the value of money shrinking.

Inflation certainly grows the economy, as all assets denominated in dollars, see their valuations rise, because the value of a US dollar has fallen.

Whoopity do... the GDP number went up. This isnt real growth. Your example of 'promoting economic activity for the sake of economic activity' is also not real growth, when one defines real growth as the production of wealth. If this were true, as a nation, we could become exceedingly wealthy simply by expanding the money supply, issuing monthly checks to oursel

When money is not circulating, price levels adjust accordingly; it has no net impact on the economy unless for some reason a shift happens very rapidly. Sometimes prices are not allowed to fall due to various government interventions; the solution is generally thought to require more interventions, but for some reason it's seldom thought that we could just remove the bad policies that prevent price elasticity (which is a very important component to the free market).

Investing money in securities is typically about as useful to the economy as stuffing it in a mattress. It is only when money is spent on goods and services that it adds to the economy. When I buy $100 in Google stock, that money just vanishes as far as the economy is concerned (well, modulo the 30% broker fee, of course). It might come back later, but until it does it's gone.

Investing money in securities is typically about as useful to the economy as stuffing it in a mattress.

Umm, no.

When I buy $100 in Google stock, that money just vanishes as far as the economy is concerned (well, modulo the 30% broker fee, of course)

Again, this is wrong. For one thing, note that broker fees are on the order of fractions of a percent, not 30%.

When you buy Google stock from Google (i.e. during an IPO or subsequent public offering), that money goes to the company so that it can invest the cash in growth -- that means buying equipment, facilities, real estate, hiring and paying employees, etc. That money is most definitely in circulation.

Of course Google isn't selling stock right now because it has plenty of cash to fund growth and doesn't need to raise capital. So if you buy Google stock right now, you're buying it from someone else who bought it from Google (or from someone who did; the chain can be arbitrarily long). But the point is that you're buying it from someone. As it happens, I just sold a non-trivial (for me) chunk of Google stock; there's a check waiting at home for me which I'm going to spend on building a house (well, on covering some of the early incidentals; I'll get a loan for the bulk of it). That money will buy building materials, pay constructor workers, etc. That money is also definitely in circulation.

But what if you buy your stock from a big investment firm rather than from someone like me? Is it out of circulation then? Nope. The investment bank will take your cash and put it into something else... something, in fact, that it believes will be more productive than Google. At least that's true of the value-investing portion of the investment industry, obviously there are other segments that focus on arbitrage. The money managed by those segments is more debatable, but they do contribute significantly to liquidity, which translates to your ability to buy or sell Google stock on a whim.

There are some issues with the velocity of money in the US, which is a measure of how quickly it circulates. It's at the lowest point in decades. The fed has been pumping massive amounts of new money into the system, and it's not helping. I'm not enough of an economist to really understand the issues here, but the most sensible explanation I've seen is that circulation is reduced because people are using the money to pay down debt. We had a massive explosion of velocity fueled by an extravagant credit boom, but it was unsustainable. That unsustainability was a big part of the housing crash and the recession, but we still have excessive debt and the correction isn't over yet, so velocity stays low.

...When the federal reserve increases the supply of money, inflation is the net result. The net result of the fed increasing the money supply and inflation, is a tax on everyone who currently owns US dollars, as each of their dollars now purchases fewer real goods

Not exactly. The (money supply) times (velocity of money) equals (cost of goods), times (production rate).

So, if the amount of money increases but velocity of money and the production rate (amount of goods produced per unit time) stay the same, the result is inflation.

However, conversely, if the production rate increases but the money supply and velocity of money does not, then the cost of goods decreases-- that's deflation. (Note that this is production rate, not productivity: production rate equals productivity time population times employment fraction.)

A steady economy is one in which the money supply increases exactly at a rate equal to the production rate-- in this case, the cost of goods stays constant (assuming that the velocity of money doesn't change).

When the Fed creates money via loans, it also creates debt. The value of that debt inflates (via interest) as well. That debt supply moderates the increase in the money supply, so that the inflation effect can be curtailed if the production rate doesn't rise with the money supply.

The problem with your reasoning is that it presumes that money is given in exchange for work of equal value, but of course the very basis of business is that you pay less than what the work is worth, and the difference is your profit.

You have a very strange notion of how business works. The idea is that you pay more than what the work is worth to the worker, and charge less than what the product is worth to the customer. The difference between these two is your profit. It works because the same good can be worth different amounts to different people.

The middleman isn't getting paid for nothing, either. He provides value to the worker in the form of a predictable paycheck, and value to the customer by organizing workers to produce the desired goods. Without him the (now self-employed) workers would have to go out and find individual short-term jobs on their own, and customers would be limited to such goods as can be produced by individuals or small, close-knit groups.

The idea is that you pay more than what the work is worth to the worker

Where, since one is compelled to work, what "the work is worth to the worker" is defined by what you pay them. Quite.

OP's point still stands, you must necessarily pay the worker less than the value the worker adds for you. I'm not sure, however, that the macroeconomic conclusion he draws from this observation is well founded.

Not quite: The idea is that you pay as much as the work is worth to the worker, and charge as much as the product is worth to the customer. The difference between these two can still be a positive number because the same good can be worth different amounts to different people. If it is, you profit. If it isn't, why did you start that business, when a market survey should have told you not to. Nobody pays more than what they have to to get workers, or gives a customer a better deal than will gain sales. Still, thank you for at least saying customers rather than consumers.

The problem with your reasoning is that it presumes that money is given in exchange for work of equal value, but of course the very basis of business is that you pay less than what the work is worth, and the difference is your profit. So this notion of a 1:1 connection between money and value is simply mistaken, and not only that, it's impossible in a capitalist society.

No you don't understand capitalism.

In a free market people don't exchange something of lessor value for something of greater value or vice versa, one of the parties would never agree. What happens is we meet and discover we value things differently.

If I hire you do a job, I do so because I value the "work" less than my money. That might be for any number of reasons: maybe I don't have time to do it myself despite the need; maybe I have a lot of money I don't need for anything else; maybe I don't know how to do the work and so If I chose to invest time instead of dollars the costs would be much greater; etc.

You on the other hand have offered to do the work because you have time, and want something else more and believe that you could satisfy that if you had more money. You value your time and labor less than my dollars.

Have you even looked at the budget breakdown?
Pensions are the #1 expense. Instead of 40 years in the military we're probably closer to the point where people's retirements are longer than their actual years of service. You only need 20 years of service in order to retire younger than 62. The average retirement age of a federal employee is 60 but what if someone retires in their 50's or even 40's and then ends up living into their 90s? The results can be fairly extreme.
http://www.usgovernmentspendin... [usgovernmentspending.com]

Which is why this statitistic is utterly meaningless without a thorough breakdown of where the checks go and why.

I mean technically every tax payer who gets a refund gets a check from the government, but (barring EIC) it shouldn't really count because that money was never the governments in the first place.

All the people who work for the government? I presume most of them get checks or they would stop showing up to work.

Social Security?

Military pay and pensions?

But I guess we are supposed to assume that 70% of the money we pay in taxes is spent on welfare on top of the 50% that goes to foreign aid and 30% on interest and 400% on nasa and 50000000% on foreign wars....

It would change America's mindset. If suddenly the "freeloaders" and system "cheaters" couldn't extract cash from an ATM with their foodstamp card, then they would have to go about it a different way.

There are plenty of cases where people live in gov't funded housing, get food stamps, slang drugs and have more than I do as professional. Take away the gov't funded housing, and suddenly they have some skin in the game... makes fuckin' sense to me. Maybe they find other avenues of illegitimate income, but maybe they don't. Either way, if we keep closing loopholes, eventually they have to do it the way I am.

Instead, a surprisingly large amount of federal money is handed out to wealthy Americans through Social Security, Medicare, farm subsidies, unemployment benefits, conservation programs, disaster payments and other programs.

An IBD analysis found that the richest 1% of Americans, in fact, receive roughly $10 billion each year in federal checks.

Outgoing Sen. Tom Coburn, R-Okla., who exposed these vast payment programs available to the rich, said "this reverse Robin Hood-style of wealth distribution is an intentional effort to get all Americans bought into a system where everyone appears to benefit."

The rich pay most of the taxes and pay a higher percentage of income on taxes than everyone else.

I know that right-wing talking point and I've checked it out before. Don't forget the footnote:*_________*Footnote: "Taxes" are defined to exclude FICA, which is the largest payment most middle-class and working people pay.

Percentagewise, the rich pay roughly 30%, the same as the middle-class, although those that can put everything into investment income like Mitt Romney pay about 15%.

Warren Buffett pays a lower marginal tax rate than his secretary because he uses dishonest math -- he lumps the tax that his company pays for her into her tax number, but excludes most of the tax that Berkshire Hathaway and its subsidiaries pay for him. (If he wants to claim that the employer part of payroll tax really comes out of the employee's pocket, fine, but the same logic applies to corporate income tax.)

Other examples are the people who payed FICA all their life and are now collecting. The people who payed UI and are collecting. These people are counted in that 70% figure, even though they are just withdrawing from a (mandatory to participate) insurance program that they were formerly funding.

Lots of claims in this thread as to "plenty of statistics" about how many freeloaders there are. No actual statistics provided. Tell you something?

Actually, there may be a confounding factor (this is a hypothesis, anybody who has real numbers is welcome to step forward to argue for or against):

Assuming you aren't inimically opposed to the concept of the welfare state (whether because you think that it's actually a good idea, or whether you think that it's relatively cheap insurance to keep a fundamentally capitalist economy with slightly higher tax rates to buy off the proles, irrelevant), the state basically has two options for 'redistribution':

1. Actually comparatively high taxes on individuals and corporations, used to fund a variety of not-directly-cash public services(eg. national health system, cheap or free education, etc.).

2. Avoid the flack associated (in the US) with robust public-sector offerings, and sneak in your social welfare spending primarily in 'emergency' programs (WIC, etc. which pay in scrip; but have nontrivial USD value once you discount them for being able to purchase only certain classes of goods) and in 'hand up for the virtuous poor' type things ("earned income tax credit", assorted subsidies for small business loans, edging up to programs that are basically a sop for the middle class, like mortage related deductions).

Now, lest anybody misinterpret me on this point: I Think It Is A Bad, Bad, thing that nontrivial swaths of the US population are basically so damn poor that the only cash worth squeezing out of them is sales taxes and check-cashing joint fees. However, barring a solution to that problem, it would be my contention that (like our absurd 'We should really have universal health care; because our current system is an utter clusterfuck delivering bad results for crazy high prices, and tying workers to their jobs; but universal health care is commie socialism, so let's have a crazy arrangement where the government 'launders' universal health care(at a tidy markup) through the incumbent private insurance companies!') our 'let's see if we can get some of the benefits of a welfare state without courting the unpopularity of calling it that, and without the clout to do anything about the ever-widening wealth gap' approach has left us with a singularly dysfunctional creature, neither fish nor fowl.

I apologize if I didn't express it clearly; but the punchline of my thinking is this: Unlike some countries that operate welfare states (the northwestern European ones, say), which have fairly broad political agreement on the fact that that's an OK idea, and so do a lot of their welfare spending 'in kind' (things like healthcare, education through college, sometimes various housing schemes) because it is not politically toxic to do so, the US has a welfare state; but is far more conflicted about that. This

Except that this fact isn't correct, which makes me wonder if anyone bothered to fact check the original article. The article states that 38.6% of 2.6 trillion is transfer payments in the form of medicare and medicaid, that's about 1 trillion for the mathematically challenged. That encompasses basically all medicare and medicaid outlays. The problem is medicare and medicaid outlays are not payments to individuals. For example 26% of medicare outlays are to hospitals, 23% to insurance companies for medicare advantage, 13% to physicians and so on. So the article is factually wrong, a fact that I think will be overlooked by everyone.

I would think an increase in the percentage of checks going to individuals would be a good thing. That's a lower percentage of checks going to military contractors. This is the government focusing more on helping people instead of killing them.

Why should the government's sticky fingers be involved in the money flow for these programs? For retirement, the government has a needed roll in setting standards for "safety net" investment choices, and in insuring people actually do save, but they don't need to handle the money. Charity is great, and we should all be compassionate, and again the government has a needed role in setting standards, but they don't need to handle the money.

You mean like the 2008 Financial collapse? If you kept your money still invested in stocks, it would be back up to beyond where it was in 2008. How is that wiped out? Only those who were living on leveraged money took it in the shorts. Sure, my house dropped 30% in value in 2008 - but it's now back up over where it previously peaked. I didn't have a 2nd and 3rd mortgage on the place, though - so I wasn't gambling with "on paper" money - leveraged assets.

The House turns the proposal into a bill, as required by the Constitution, editing it as it sees fit along the way. The executive can not create a bill. The bill then follows the normal constitutional procedure for introduction into the Senate, passage in both houses, reconciliation of the versions, and submittal to the executive for signature or veto.

This is the theory.

In actual practice, both House and Senate do separate budget bills at the same time, which are then reconciled.

Complaining about a conservative lean on slashdot is one of the silliest complaints ive ever seen. Does noone remember the comments around the hurricane during the 2012 RNC, with a large majority of posters wishing (some claiming to be serious) that key RNC leaders would drown?

Thats just the one that sticks out most for me because of how brazen it was (accusing the right of being the party of hate all the while wishing them to die for their political beliefs), but its by no means unique. Slashdot has an incredibly liberal lean. Any post involving anything conservative is gonna be a moshpit of democrats going off on how retarded and backwards conservatives are.

Generally I ignore it because its to be expected on an internet forum, I just think its hillarious to see a complaint that its too conservative.

Proof that Forbes lies? Because looking at Apple's published, audited financial information [google.com], I see an income before taxes of $17.7 billion - and they pay $4.6 billion in taxes, about a 23% tax rate. Now, if you are privy to some secret information you could make history and become a "Woodward and Bernstein" level famous journalist by revealing counter information and having Tim Cook and the rest of the executive team sent to prison for violating SOX laws...

It seems to me that Forbes is telling the truth. And the published, SOX-compliant reporting from Apple backs that up.